UNWTO Tourism Stories

List the ways that tourism can contribute to economic development.


Tourism can contribute to development and the reduction of poverty in a number of ways. Economic benefits are generally the most important element, but there can be social, environmental and cultural benefits and costs.

Tourism contributes to poverty reduction by providing employment and diversified livelihood opportunities. This in turn provides additional income or contributes to a reduction in vulnerability of the poor by increasing the range of economic opportunities available to individuals and households.

Tourism also contributes to poverty alleviation through direct taxation and the generation of taxable economic growth; taxes can then be used to alleviate poverty through education, health and infrastructure development. It should not be forgotten that some tourism facilities also improve the recreational and leisure opportunities available for the poor themselves at the local level. (Source)



  • Tourism is a massive industry accounting for 9% of global GDP which has huge economic potential for developing countries.
  • In 2016, more than 1 billion people travelled internationally. 40% of those journeys ended up in a developing country.
  • Tourism flows have a huge potential to lift low income countries (LICs) out of poverty.
  • Tourism represents $300 billion per year flowing from rich to poor countries (3 x bigger than the global aid budget).
  • Many small countries have benefitted enormously from tourism, however not all money trickles down to local people.

tourism and the sustainable development goals


tourism and economic development

The category of Least Developed Country was first used by the United Nations in 1971 to encourage the international community to recognise these countries as structurally disadvantaged.

Since 1971 only Botswana has graduated from LDC status, and tourism played a very significant role in that process with the annual number of international tourism arrivals increasing by more than half a million visitors between 1985 and 1998.

Cape Verde, Maldives, Samoa and Vanuatu have all been considered for graduation since 1994 and in all four of them tourism has been the single most important factor explaining the socio-economic progress which would form the basis of their graduation. 

In the Maldives, annual visitor arrivals tripled between 1985 and 1998, in the same period the proportion of tourism exports to GNP increased from 75% to 89%, making the Maldives the LDC most dependent on international tourism, followed by Samoa and Vanuatu, both with over 20%.

International arrivals to other LDCs grew fast between 1995 and 1998. Angola and Chad experienced more than 75% growth. Cape Verde, The Gambia, Laos, Mali and Zambia all enjoyed growth above 20%. However, Sudan, Sierra Leone, Sao Tome, Kiribati, Ethiopia, Eritrea, the Central African Republic and Burundi, all saw reductions in international visitor arrivals. (Source)





Benefits of Tourism

  • Develops secondary industries to support tourism e.g agriculture, manufacturing, transport and services (The multiplier effect)

  • Tourism is labour intensive and employs a high number of people in different industries

  • Tourism depends on natural capital (wildlife, scenery and beaches) and culture, which are assets owned by the poor

  • Provides an industry in countries that have no exports

  • More jobs are filled by women

Limitations of Tourism

  • High levels of foreign ownership lead to leakage of profits to foreign countries

  • Locals may be displaced from agricultural land and lose access to resources like beaches

  • Tourism is vulnerable to changes in the global economy, losing tourists in times of economic recession

  • International visitor arrivals are vulnerable to conflict, crime, political instability and natural disasters in tourism destinations

  • Tourism requires highly sophisticated marketing that might not always be funded by the government





exam practice

Examine the view that tourism offers a guaranteed route towards economic development for low-income countries. (10 marks)



Answer invites debate around “guaranteed”, in addition to recognizing that there are positives and negatives in any case, which in itself makes the statement controversial.

Economic benefits can be discussed for individuals working in the tourist industry or for national income. Expect details of multiplier effects, foreign earnings. This must be balanced against financial losses (leakage of profits from foreign-owned ventures). Good answers should recognize that tourism is not a one-size-fits-all development strategy: it may not be the best strategy in some cases (and parallel strategies might exist).

For band D, there should be an understanding of how tourism may lead to economic development, and an awareness of the limitations of tourism to economic development.

At band E the general truth of the statement should be explored, using exemplification.

At band F there should be a balanced evaluation.